MODERN APPROACH TO MANAGEMENT

CONTINGENCY MANAGEMENT & OUCHIS THEORY Z

MODERN APPROACHES TO MANAGEMENT

Modern approaches are there besides classical, behavioral and quantitative approaches to management. ` There are mainly 2 approaches, which have significantly shaped modern management thoughts 1. Contingency Theory. 2. Ouchis Theory Z The 2 Theories combined and thus arrives to Contemporary Approach to Management

CONTINGENCY MANAGEMENT THEORY

Developed by the managers, consultants and researchers who tried to apply the concepts of major schools of management thoughts to real life situations. Paul Hersey & Ken Blanchard developed contingency approach to leadership. This theory suggest that, there is no one best way to manage all situations, or There is no one best way to manage. It depends. Here managers can take business decisions or adopt a particular management style only after considering all situational factors.

THE CONTINGENCY MANAGERIAL VIEW

UNIVERSAL VIEW: Same managerial principals apply to all situations. CONTINGENCY VIEW: Managerial actions varies from situation to situation Situation 1

Situation 2

Situation 3

The task of managers is to identify which technique will in a particular situation, under particular circumstances, & at a particular time, best contribute to the attainment of management goals.

Contingency Theory is recognition of the extreme importance of individual

manager performance in any situation. It rests on the extent of manager power control over a situation, and the degree of uncertainty in any given situation. The role of management in the contingency approach is to develop an appropriate management solution for any given organisational environment. The contingency approach is devoid of management principles.

It is a heuristic management paradigm, highly dependent on the experience

and judgement of the manager in a given organisational environment. It is principally directed at the management practitioner seeking to control a distinct organisational environment.

CONTINGENCY MANAGEMENT THERE IS NO ONE BEST WAY TO MANAGE

THERE ARE NO UNIVERSAL PRINCIPLES OF MANAGEMENT

ANALYZE THE SPECIFIC SETTING & CIRCUMSTANCES

CAREFULLY STUDY THE SITUATIONKEEP YOUR EYES OPEN

FIND THE APPROACH THAT BEST FITS THE SITUATION

DONT FOLLOW FADSIT ALL DEPENDS

EMPHASIZE DIAGNOSIS AND FLEXIBILITY

MANAGERS MUST LEARN TO BE FLEXIBLE

William G. Ouchi
An American professor and author in the field of business management He was a pioneer in introducing interactional leadership theory in his application of Japanese-style management to corporate America. Studied the differences between Japanese and American companies and management styles

Born 1943 Honolulu, Hawaii He earned a B.A. from Williams College (1965), an MBA from Stanford University (1967) and a Ph.D. in Business Administration from the University of Chicago (1972).

Ouchi Recommended A Hybrid Of The Two Approaches, THEORY Z.

Organization Type A American
Short-term employment Individual decision making

Organization Type J Japanese

Lifetime employment Collective decision making

Organization Type Z Modified American

Long-term employment Collective decision making

Individual responsibility
Rapid evaluation & promotion

Collective responsibility
Slow evaluation & promotion

Individual responsibility
Slow evaluation & promotion

Explicit control mechanisms

Implicit control mechanisms

Implicit, informal control with explicit, formalized measures

Moderately specialized career paths

Specialized career path

No specialized career path

Segmented concern for employee as an employee

Holistic concern for employee as a person

Holistic concern, including family

Long-Term Employment
Traditional U.S. organizations are plagued with short-term

commitments by employees, but employers using more traditional management perspective may inadvertently encourage this by treating employees simply as replaceable cogs in the profit-making machinery.

Type J organizations generally make life-long commitments to

their employees and expect loyalty in return, but Type J organizations set the conditions to encourage this.

This promotes stability in the organization and job security among

employees.

Consensual Decision Making

The Type Z organization emphasizes communication,

10

collaboration, and consensus in decision making.

This marks a contrast from the traditional Type An organization that emphasizes individual decisionmaking.

11

Individual Responsibility
Type An organizations emphasize individual accountability and performance appraisal Traditionally, performance measures in Type J companies have been oriented to the group. Thus, Type Z organizations retain the emphasis on individual contributions that are characteristic of most American firms by recognizing individual achievements, albeit within the context of the wider group.

12

Slow Evaluation And Promotion

The Type An organization has generally been characterized by short-term evaluations of performance and rapid promotion of high achievers

The Type J organization, conversely, adopts the Japanese model of slow evaluation and promotion.

13

Informal Control With Formalized Measures

The Type Z organization relies on informal methods of control, but does measure performance through formal mechanisms

This is an attempt to combine elements of both the Type A and Type J organizations.

14

Moderately Specialized Career Path

Type An organizations have generally had quite specialized career paths, with employees avoiding jumps from functional area to another. Conversely, the Type J organization has generally had quite non-specialized career paths. The Type Z organization adopts a middle-of-the-road posture, with career paths that are less specialized than the traditional U.S. model but more specialized than the traditional Japanese model.

15

Holistic Concern
The Type Z organization is characterized by concern for employees that goes beyond the workplace. This philosophy is more consistent with the Japanese model than the U.S. model.

Comparison & Contrast of Theories X, Y & Z

Management Concept Douglas McGregor (Theory X & Y) William Ouchi (Theory Z) Either being unwilling or unmotivated to work, or being self motivated Believes that people are towards work. Threats and innately self motivated to not disciplinary action are only do their work, but also Motivation thought to be used more are loyal towards the effectively in this situation, company, and want to make although monetary rewards the company succeed. can also be a prime motivator to make Theory X workers produce more.

Comparison & Contrast of Theories X, Y & Z

Management Concept Douglas McGregor (Theory X & Y)
As mentioned above, McGregor's managers, in both cases, would seem to keep most of the power and authority. In the case of Theory Y, the manager would take suggestions from workers, but would keep the power to implement the decision.

William Ouchi (Theory Z)

The manager's ability to exercise power and authority comes from the worker's trusting management to take care of them, and allow them to do their jobs. The workers have a great deal of input and weight in the decision making process.

Power & Authority

Comparison & Contrast of Theories X, Y & Z

Management Concept Douglas McGregor (Theory X & Y) William Ouchi (Theory Z)

Leadership

Theory X leaders would Theory Z managers would be more authoritarian, have to have a great deal of while Theory Y leaders trust that their workers could would be more make sound decisions. participative. But in both Therefore, this type of leader cases it seems that the is more likely to act as managers would still "coach", and let the workers retain a great deal of make most of the decisions. control.

Comparison & Contrast of Theories X, Y & Z

Management Concept Douglas McGregor (Theory X & Y)
This type of manager might be more likely to exercise a great deal of "Power" based conflict resolution style, especially with the Theory X workers. Theory Y workers might be given the opportunity to exert "Negotiating" strategies to solve their own differences.

William Ouchi (Theory Z)

Conflict

Conflict in the Theory Z arena would involve a great deal of discussion, collaboration, and negotiation. The workers would be the ones solving the conflicts, while the managers would play more of a "third party arbitrator" role.

THANK YOU